Last year was marked by a huge contraction in U.S. imports, which slumped by 3.3%, the largest drop since 1980. As imports shrank, the trade imbalance improved by $158 billion, adjusted for inflation. Even in the fourth quarter, when exports dove at a 20% annual rate, much more sharply than imports, net exports remained relatively stable. That’s because the U.S. imports so much more than it exports. A smaller percentage decline in imports than exports can still lead to an improved balance. (This is the opposite of what happened in good times — since the trade gap can grow even if exports are outpacing imports.)

Lots of interesting thoughts fly out of this development: Perhaps it was never the case that the U.S. could grow its way out of its current account deficit — perhaps it needs to shrink its way out. The last major improvement in the U.S. trade position happened in 1991, amidst a consumer-led recession. As consumers cut back and save more, they depend less on foreign saving.

The numbers also are a warning to leaders outside of the U.S. to be careful with their schadenfreude. America’s recession is very much theirs. At the Davos World Economic Forum this week, many business and political leaders attacked the U.S. economic model. After the lectures many emerging market leaders got from U.S. officials and bankers in the 1990s about their failed policies, the derision is certainly due. But the truth is, the rest of the world benefited enormously when the U.S. enjoyed good times — particularly export-driven emerging markets. Their capital helped to fuel the boom. They have a lot to lose now that times are tough. –Jon Hilsenrath

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